Stock markets around the world dropped sharply Monday as financial institutions reported more large losses.

U.S. markets closed sharply down, some at levels not seen since 1997. All three major stock indexes were down four percentage points or more.

The Wall Street selloff followed news that the insurance giant American International Group, or AIG, lost more than $60 billion in last year's fourth quarter. The U.S. Treasury unveiled a revised rescue package for AIG, promising to provide an additional $30 billion on an "as needed" basis.

Oil prices dropped more than 10 percent in New York trading Monday, as investors worried that the recession will further cut energy demand.

The worldwide selloff continued in Asia Tuesday, with Tokyo's Nikkei index opening more than two percent lower.

Meanwhile, the head of the U.S. mortgage finance company Freddie Mac, David Moffett, announced Monday that he is stepping down after less than six months on the job. Freddie Mac says it is working with U.S. regulators to name a successor.

The U.S. government took over Freddie Mac and its sister company Fannie Mae last year to pevent their collapse after both suffered heavy losses from increasing foreclosures. The two companies own or guarantee more than half of all U.S. home mortgages.